What is Clipping ?

To understand clipping, it is helpful to have a basic understanding of the electronic systems in which the audio signal travels.
Once acoustic signals are converted to an electronic signal (via a microphone or instrument pickup), an AC voltage becomes a representation of the audio.
To increase the volume of the audio output the voltage of this AC signal must be increased.
Amplifiers employ devices that serve to increase the gain but there are limitations to the amplitude of the signal can travel as defined by the power source.
These boundaries are known as the voltage rails (represented by the dotted green lines in the following diagram).
There are two sine waves in the diagram. The top sine wave remains within these boundaries, while the bottom sine wave exceeds this limitation.
The flattened blue lines are the results of the signal being "clipped" off.

It is essential that a live sound engineer set the sound system in a way to avoid clipping because a failure to do so could cause damage to the loudspeakers.
When a signal reaches the point of clipping, speaker cones do not move, as the clipped signal is essentially a DC signal for the duration that it exceeds the voltage rail boundaries.
This causes all of the power from the amplifier to be used towards heating the voice coils instead of producing sound.
In other words, during the times the signal is flattened, a loudspeaker is 100% efficient at converting power into heat.

Facts about clipping:

Any clipped signal can potentially damage a speaker.
It does not matter whether the mixer, amplifier, or any other piece of audio equipment clips the signal in the system.
Damage can occur even when the amplifier is not at full output!.

Built in loudspeaker protection circuits cannot detect clipping and therefore cannot prevent damage from occurring because of clipping.

A driver can fail by using too small of an amplifier. If a loudspeaker is rated for greater power handling than the amplifier, then the speaker can burn out if the amp is driven into clipping.

The power handling specifications of a loudspeaker are only relevant for normal unclipped source signals.
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